Whether straight or gay, people who have decided
to build a life together but either can't or don't want to get married
need to be especially diligent when it comes to financial planning.

"Planning" is the operative word. You have assets
and, perhaps, you'll acquire more. You should protect those assets.
You should also make sure your wishes are carried through if you
become incapacitated or die. Unless you take steps now to ensure
your financial future, you could run into a wall of trouble that
will take a sizable chunk of your assets in either attorney fees
or taxes to untangle.

The first rule of thumb
is talk to a professional -- a credentialed financial adviser or
an estate attorney. Maybe both. This isn't the time to cut corners
to save money. Laws can vary from state to state, and individual
companies can vary greatly in what benefits they allow an unmarried
partner to share.

Registering
your relationship Financial planning can be complicated for anyone, single
or married. But married people have that little piece of paper that,
in essence, says one spouse is the legal heir of the other even
if there's no will. As an unmarried couple, you'll need a lot of
documentation to make up for the lack of a marriage certificate.

Of course, not all couples
will want to jointly register assets. If one person brings a house
into the relationship, he or she may want to keep it solely in his
or her name. Keep in mind that more than 50 percent of couples break
up. You need to do what makes you comfortable. Your financial planner
will work it out.

- advertisement -

"For one couple I had to run three separate
plans -- one for one partner, one for the other -- they had separate
incomes, separate benefits and their tax projections were different.
And I had to develop another plan combining their assets, income
and living expenses," says CFP Diane Maloney of Beacon Financial
Planning Services in Plainfield, Il. "They now intend to hold some
assets jointly -- merge their retirement benefits."

That's important, Cherry says. "A key here is
retirement plans and insurance policies. Many people don't take
advantage of designating beneficiaries -- primary and contingent.
This is how you maintain very strict control over your assets. They
can contest a will, but if you've designated in your retirement
and insurance plans, 'This is my beneficiary,' then it really isn't
contestable."

Of course, sometimes it may not be possible
to have a plan set up exactly the way you want. "Robert," one of
Maloney's clients, was a state employee. He'd like to let his partner
share in his health and retirement benefits, but he says the state
won't allow it.

"Probably the most unfortunate
thing has been that he can't use my health insurance," Robertsays.
"We're not allowed to put a partner as the beneficiary. Also, I
will receive my retirement until I die, but it ends with my death
and nothing can be picked up by him."

Are your assets up for
grabs?Another issue you'll want to address is
writing a will or a trust. It's just plain foolish not to have one
or the other. People who die without a trust, a will or a legal
spouse are pretty much just putting their assets up for grabs --
by the state and just about anyone else.

Lisa Hauser, an estate attorney with Comiter
& Singer in Palm Beach Gardens, Fla., says you may want to set up
a trust if you're getting older and worried about becoming incapacitated.

"You want to avoid having your assets subjected
to a guardianship proceeding," says Hauser. "In a trust you can
name the people who will be the trustees. You can name 20 successor
trustees, whereas in a guardianship you don't know who the judge
will appoint. There are forms to designate someone as guardian,
but there's no guarantee the judge will appoint that person.

"Plus, people may try to contest it. People
can contest your appointment in a trust, but it's more difficult.
With a guardianship you're always under court supervision -- how
the money is spent -- tons of paperwork."

Another reason to opt for a trust over a will,
according to Hauser, is privacy.

"If your assets are in your name as opposed
to in a trust, there will have to be a probate proceeding when you
die. That becomes part of the public record. In a trust only the
income beneficiaries have a right to know the assets. Another reason
to have a trust is probate involves hiring an attorney, paying an
hourly fee plus filing fees."

Hauser says there's no great tax benefit to
setting up a trust. An attorney can do the same tax planning in
a will.

Power of attorney
Power of attorney is critical. It's just as important during your
life in case you become incapacitated as it is after your life.

Maloney says you'll want two separate documents
-- one for health care and one for property.

"If it's your intention for your companion to
make decisions regarding health care, then that absolutely needs
to be stated because family members may not have as clear an understanding
as to what your intentions are and they'd ordinarily have the primary
right."

Again, your financial planner will help you
navigate state laws. In Florida, for example, says Sean Cherry,
a document called the "health care surrogate" is needed.

"That allows you to make decisions in a hospital
just as a legal spouse would. You also should have a living will.
In that you clearly state to medical authorities whether you wish
to have life-sustaining care."

The power of attorney for property will let
you make financial decisions, Cherry says.

"Just as the health care surrogate document
lets you make decisions in the hospital, the power of attorney allows
you to do so everywhere else -- banks, investment firms. If your
partner doesn't have you on his or her checking account and you
need money for some of those medical bills, the power of attorney
allows you to do that. It's about liquidity -- not being stuck for
funds when you need them."

If you and your partner are considering talking
to a financial adviser, call several firms in your area and ask
if they have someone with substantial experience in assisting unmarried
couples. Be sure to check the adviser's
credentials.

"I'm finding an increasing number of unmarried
couples," says Cherry. "I don't even notice any more. These issues
are important whether people are gay or straight. I used to think
it just applied to gay couples. Now that's not true. I have as many
straight and unmarried couples as gay couples. People are terrible
about taking care of these things. If I had a lot of money, I'd
run a foundation teaching this in our school systems. Money is wasted.
It's every day, it's everybody."

Don't be uncomfortable about discussing these
issues. No one likes talking about illness, death, or breaking up
and who gets the money. It's important that your assets be protected
and that your wishes are carried out.

Advertising Disclosure: Bankrate.com is an independent, advertising-supported comparison service. Bankrate may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.